With little fresh economic data on the docket FX moved mainly on yesterday’s news as traders continued to sell the EURUSD in the wake of dovish statement from ECB.

Mario Draghi destroyed the euro yesterday by essentially telling the market that despite the best economic growth in the region in years, he wasn’t ready to pull the plug on QE just yet. By extending QE to 9 months into 2018 Mr. Draghi dashed any hopes of an early taper and broke the hearts of euro bulls.

The damage done to the currency wasn’t just fundamental but technical as well as it broke the key 1.1650 support. With Fed clearly on a path to more rate hikes, while the ECB remains a non-player for all of 2018, the prospect of further interest rate divergence between the two currencies will only expand and could push the EURUSD quickly towards the key support at 1.1500 level.

ECB’s policy course suggests that the euro is now a strict sell on rallies trade for now unless US policy suddenly turns dovish as well.

To that end, today’s US GDP data could be a prime mover of trade. The market is looking for 2.5% print versus 3.1% the period prior as analysts expect a small decline due to the hurricane activity in late summer. However, if the data proves to be more resilient than expected with growth closer to 3.0% the dollar should get a further boost with EURUSD likely testing the 1.1600 barrier and USDJPY climbing through the 114.50 level which has been key resistance for months.

A stronger US GDP print could prove to be the foundation for a more sustainable dollar rally into next week as the market gets ready for the FOMC.